The NCLAT, Principal Bench, New Delhi opined that the Appellant cannot be treated as a financial creditor as the Appellant was merely a collaborator in the development agreement.
It was evident from the terms and conditions of the Development Agreement that there was no disbursement for the time value of money by the Appellant. Therefore, the debt cannot be classified as a financial debt and the Appellant cannot be said to be a financial creditor.
Brief Facts:
The present appeal has been preferred against the order vide which an application filed by the home-buyers was allowed and as a result, the Appellant was removed from the Committee of Creditors (hereinafter referred to as “CoC”).
Contentions of the Appellant:
The case of the Appellant was that the development project was being carried out on the land owned by the Appellant. His claim was admitted before the Resolution Professional and subsequently, he became part of the CoC. However, an application was preferred by the home-buyers vide which he was removed from the Committee on the ground that he was not a financial creditor.
Observations of the Tribunal:
The NCLT adjudicated that the Appellant was not a financial creditor as no amount was disbursed for the time value of money. The Tribunal relied on the case of Namdeo Ramchandra Patil & Ors. V. Vishal Ghisulal Jain (Company Appeal (AT) Ins. No. 821 and 930 of 2021).
The Appellate Authority upheld the decision of the Namdeo case wherein it was expounded that disbursement against the time value of money is a prerequisite for the financial debt under Section 5(8) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”).
It was held that the Appellant cannot be treated as a financial creditor as the Appellant was merely a collaborator in the development agreement. It was evident from the terms and conditions of the Development Agreement that there was no disbursement for the time value of money by the Appellant. Therefore, the debt cannot be classified as a financial debt and the Appellant cannot be said to be a financial creditor.
The decision of the Tribunal:
Based on the above-mentioned reasons, the appeal was dismissed.
Case Title: Ashoka Hi-tech Builders Pvt. Ltd. V. Sanjay Kundra & Anr.
Coram: Justice Ashok Bhushan, Barun Mitra (Technical Member)
Case No: Company Appeal (AT)(Insolvency) No. 46 of 2023
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